LAST COPY '? Q d not | remove from files. FIRST ANNUAL REPORT OF THE ONTARIO ENERGY BOARD Year Ended December 31, 1960 I M t- phone em. 3-1211 ONTARIO ENERGY BOARD 79 ° BAY street LOCAL 2-2851-2-3 TORONTO 2 March d, I96I. Re: First Annual Report Dear Sir: I have the honour to send you herewith the First Annual Report of The Ontario Energy Board to December 31, i960. Your obedient servant , A.R. Crozier, Chairman. The Honourable Robert W. Macaulay, Q.C, Minister of Energy Resources, Parliament Buildings, Toronto, Ontario. FIRST ANNUAL REPORT OF THE ONTARIO ENERGY BOARD Year Ending December 31, i960 TABLE OF CONTENTS Page Introduction 1 Summary of Energy Board Functions and Powers . 3 Personnel 5 Applications Heard and Orders Issued 6 Revenue , 9 BI- ANNUAL REPORT ONTARIO ENERGY BOARD, i960 INTRODUCTION The Ontario Energy Board* s predecessor, The Ontario Fuel Board, was established by the enactment of The Ontario Fuel Board Act, 1954, which was proclaimed in force by the Lieutenant Governor on May 13, 1954. It consisted, in the first place, of three members but, later in 1954, two more members were added, making five in all. The Ontario Fuel Board Act, 1954, was amended in 1955, 1956, 1957 and 195& but (except for Section 6, 195&) the Act and Amendments were repealed and The Energy Act, i960, and The Ontario Energy Board Act, i960, were substituted therefor, being proclaimed in force on September 1, i960. The functions of the Ontario Fuel Board were partly judicial and partly administrative in nature but, after September 1, i960, the administrative work, as described in The Energy Act, i960, was transferred to the Department of Energy Resources. At the same time, the Ontario Energy Board took over the judicial part of the work, as prescribed by The Ontario Energy Board Act, i960. The remainder of this report, therefore, will complement the series of Annual Reports relating to the activities of the -2- Ontario Fuel Board up to the time of its demise on August 31, i960, and will describe the work of the Ontario Energy Board from its inception on September 1, until December 31, i960. The composition, responsibilities and powers of the Board are defined in The Ontario Energy Board Act, i960, and in several sections of The Energy Act, i960. It is there enacted that public hearings shall be held by the Board before any Order is made relating to matters over which it has jurisdiction and that written reasons shall be given for its decisions. The Board may make Orders approving or fixing just rates and other charges relating to the sale of gas, but it may also issue interim Orders valid for not more than one year, decreasing the rates charged for gas, without a hearing, when requested to do so by the company concerned. Also, in addition to the powers enumerated below, regarding the injection and storage of gas, the Board may fix the rates which the person authorized may charge for the storage of gas. Provision is also made for appeals to the Lieutenant Governor in Council and to the Court of Appeal. Part II of The Energy Board Act relates to the functions of the Energy Returns Officer, who is appointed by the Lieutenant Governor in Council to assist the Board, primarily in financial matters related to gas rates. This part of the Act also provides the E.R.O. with authority to require returns and statements from -3- gas companies and also provides that this information remain confidential. It is also prescribed that the Board shall make a report, annually, tc the Minister, containing such information as the Minister requires. Part II of The Energy Act provides that the construction of pipe lines for oil or gas must not be undertaken unless, and until, a public hearing has been held and an Order has been obtained from the Board giving the applicant the right to con- struct. At all public hearings, any persons interested have the right to be heard. In the event a pipe line company having leave to con- struct a line is unable to reach agreement with the land-owners concerned, a further hearing must be held by the Board, after which the applicant may be authorized to expropriate land pro- vided it is in the public interest. Provision is also made for a Board of Arbitration to make awards relating to matters of com- pensation, in cases where the amounts of such compensation for expropriation or damage are in dispute. SUMMARY OF ENERGY BOARD FUNCTIONS AND POWERS The Energy Board Act, i960 . 1. To make Orders approving or fixing just and reasonable rates for the sale of gas by persons engaged in: -4- (i) gas distribution; (ii) gas transmission; (iii) gas storage. 2. To make Orders authorizing persons to inject gas into, store gas in and remove gas from designated gas storage areas . 3. To make Orders for the payment of money out of the Abandoned Works Fund . 4. To make Orders granting leave to discontinue the supply of gas to any work or appliance. 5. To adjudicate, examine and report on the following matters referred to the Board by the Lieutenant Governor that require a public hearing: (a (b (c (d (e (f Location and spacing of wells; Designation of drainage units; Joining of interests in a field or pool; Exempting persons from compliance with the Act: Exempting appliances from compliance with the Act; Any question respecting energy that requires a public hearing. The Energy Act, i960 . 1. To make Orders respecting the revocation, suspension or reinstatement ^f licences, permits or registration. -5- 2. (a) Tc make Orders granting leave to construct pipe lines for the transmission of oil or gas. (b) To make Orders authorizing expropriation of land for the purposes of an oil or gas pipe line. The Municipal Franchises Act 1. To make Orders granting the approval of terms and conditions nf franchise by-laws for the distribution of gas in municipalities. 2. To make Orders granting Certificates of Public Convenience and Necessity for the distribution of gas in municipalities. The Assessment Act 1. To designate the length and diameter of gas and oil transmission lines for assessment purposes. PERSONNEL The following persons constituted the personnel of the Board during the period September 1st, i960, to December 31st, I960: A.R. Crozier, Chairman J.J. Wingfelder, Commissioner and Secretary D.M. Treadgold, Commissioner L.R. MacTavish, Commissioner E.A. Allcut , Commissioner -6- Ivy C. Fidler, Secretary to the Chairman and Acting Assistant Secretary to the Board H.G. Clark, Board Engineer W.P. Armes, Energy Returns Officer APPLICATIONS HEARD AND ORDERS ISSUED *FUEL *ENERGY BOARD BOARD Approval of Terms and Conditions of Franchise Agreements 5 5 (section 9 of The Municipal Franchises Act) Certificates of Public Convenience and Necessity 5 6 (section 8 of The Municipal Franchises Act) Rate Orders (18 of these were extensions, i.e. interim) (The Ontario Fuel Board Act) Leave to Construct Orders (The Pipe Lines Act) Expropriation Orders ( 1 parcel involved ) (The Pipe Lines Act) Secondary Recovery Orders (The Ontario Fuel Board Act) Gas Storage Orders (The Ontario Fuel Board Act) General - 1 (Hearings held as result of matters referred by Orders-in-Council) 60 2k TOTAL 8k * Fuel Board - period January 1/60 to August 31/60 * Energy Board - period September l/6o to December 31/60 21 d 26 2 1 2 1 - 1 -7- The Ontario Energy Board is presently engaged in its first major rate hearing, namely that of the Consumers' Gas Company, which is the largest gas utility in Canada. It serves 92 municipalities and more than 200,000 customers. This hearing commenced on September 2S, i960, and has been adjourned three times, to give the company the necessary opportunities to prepare data for the Board, which was not avail- able at the time of the first hearing. Before December 31st, i960, 9 exhibits had been filed by the company, comprising in all, some 300 pages and the transcript of evidence covered 355 pages. The hearing will be reconvened on January 9th, I96I, and it is antic- ipated that the transcript may ultimately exceed 1000 pages. The extensive deliberations are due mainly to the fact that the Consumers' Gas Company was established over 110 years ago and was organized and operated for the production of manufactured gas, until the year 19 c 5. During this period, the company's rates were not subject to Provincial Government regulation. In 1955, the company commenced the distribution of natural gas and, at that time, the company's rates came under the control of the Provincial Government. These conditions have complicated the work of the Board because much of the background material, that would normally be used in situations of this kind, was not available. Conse- quently, much research work has been necessary on the part of the Board and its staff with regard to financial statements, account- ing procedures and statistical information. The company has -e- co-operated with the Board in these matters. As this is the first of a series of similar hearings, the Board and its staff have studied rate cases in other jurisdictions, both in Canada and the United States. It is anticipated that this hearing will be completed in the spring of 1961 and that, thereafter, other hearings will be commenced relating to the rates charged by- other gas companies. While some of the $k applications enumerated above, related to routine matters of a relatively minor nature, others were concerned with fundamental questions and the decisions made thereon may have important influences on the entire gas and oil industry. Two examples of the latter are:- (a) The injection and storage of natural gas in a previously designated storage area was authorized. This procedure results in the provision of a reservoir of gas, that will facilitate the contin- uity of gas supplies in the Province of Ontario and will help to keep gas rates lower than would otherwise be possible. Thus, the decision may have an important bearing on the economics of the gas industry. (b) The Board was also directed, by Order-in-Council, to adjudicate, examine and report on a water -9- flooding project in Lambton County for the secondary recovery of oil from an old oil field near Oil Springs. After interested parties had been heard and following much deliberation, the Board recommended that a regulation be passed, permitting this operation. The project will probably be undertaken early in I96I and will increase, substantially, the recovery of oil from a partially depleted oil field. This will have the effect of making oil available that would not otherwise be recoverable and, there- fore, will extend the life of one of the oldest oil fields in the Province of Ontario. It is noteworthy, also, that 2& applications were heard relating to the construction of transmission pipe lines for providing gas services to areas in the Province that were not previously served with that fuel. Some of these applications provided for the replacement of under-sized or obsolescent piping, thus providing increased gas supplies to certain areas and enhancing public safety. REVENUE In compliance with the requirement of section 23 of The Ontario Energy Board Act, I960, the Board fixes costs payable on -10- various types of Applications and Orders. There is a statutory- tariff of $25 for filing an Application. Hearing costs vary and are fixed at the discretion of the Board with due regard being given to the circumstances, time required for the Hearing and Consultants' costs, if any. Board revenue for the calendar year i960 is as follows: Ontario Fuel Board $ 5,450.00 (Jan. 1/60 to Aug. 31/60) Ontario Energy Board 1,300.00 (Sept. 1/60 to Dec. 31/60) $ 6,750.00 All of which is respectfully submitted. DATED at Toronto this day of March, 1961. A.R.. Crozier, Chairman.